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The interactive effects of incentive threshold and narcissism on managerial decision-making

Running head: INTERACTIVE EFFECTS OF INCENTIVES AND NARCISSISM 1
The Interactive Effects of Incentive Threshold and Narcissism on Managerial Decision-Making
Kelsey Kay Dworkis
Ph.D. Candidate
University of Southern California
Marshall School of Business
Leventhal School of Accounting
kelseykd@usc.edu
May 2013

This study investigates the effects of extrinsic motivation, as provided by a bonus threshold in a compensation plan, and intrinsic motivation that derives from narcissism on capital investment decision-making quality. Using an experiment, this study examines Millennial managers’ (i.e., managers born between 1978-1995) decision-making quality under two levels of bonus threshold (high, low) and two levels of measured narcissism (high, low). Results show that a manager’s level of narcissism and bonus threshold condition to which they are randomly assigned interact to result in systematically different performance levels on the capital investment task. Millennial managers higher in narcissistic characteristics outperform less narcissistic managers in a capital investment task under a low bonus threshold; however, this performance result is reversed under a high bonus threshold. Implications of MCS adaptations that can enhance decision-making of Millennial managers are discussed.

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Running head: INTERACTIVE EFFECTS OF INCENTIVES AND NARCISSISM 1
The Interactive Effects of Incentive Threshold and Narcissism on Managerial Decision-Making
Kelsey Kay Dworkis
Ph.D. Candidate
University of Southern California
Marshall School of Business
Leventhal School of Accounting
kelseykd@usc.edu
May 2013